Thursday, the Senate Finance Committee held a hearing on a cap and trade system for greenhouse gas emissions. Senator Chuck Grassley, R-Iowa, and ranking member of the committee, explained that the program will raise hundreds of billions of dollars every year for the federal Treasury. With revenue of that magnitude, it would be surprising if the Finance Committee were not involved.
It's widely held that industry will pass the added cost along to consumers in the form of higher prices for energy, services, and any product that takes energy to produce or transport to market. Grassley said those energy price increases will have a significant negative impact on economic growth and job creation and that it's almost like a federal energy tax.
The Senate Finance Committee has jurisdiction over all federal taxes and has extensive experience in considering the tax incidence of various policies. Grassley says that experience will be invaluable on this subject because a very important aspect in designing a cap and trade system is who will ultimately bear the cost of the program and in what proportion.
Hedge funds, private equity funds, and other companies have been lobbying Congress to pass cap and trade legislation. In fact, according to Grassley, Enron and AIG were early supporters of cap and trade legislation.